Pitch advice from seasoned funder

I was fortunate enough to be in an Intuit group pitching to multiple investors recently. Bing Gordon was there and gave feedback afterwards. It was so valuable that I just had to share it. 
He said the best entrepreneurs build small and great…one feature at a time. They use existing assets, existing brand, and existing data. This is a hit business and you need to present like a movie pitch. Your presentation is a movie poster with a clear picture of the customer enjoying value. This pitch needs to have very few slides:
  • Distinct strategies 
  • Starting assets 
  • Numbers
Only 3-5 bullets, one sentence per bullet and know your slides at all times. You have to know it inside and out…you can work the story without slides and pictures. 

Steve Blank at the Alchemist Series

I just sat in the front row of an intimate Steve Blank talk. It was great! I got to be in the “hot seat” on the stage where I put my venture out in front of the audience and took questions. Then, Steve Blank came up and did a great presentation on the Startup Owner’s Manual and answered all kinds of great questions we had for him.

Here are my notes (I banged some out on twitter during the session).

Business plans were the old way. When they didn’t work, you fired the VP of Sales. Then you hired another VP of Sales. If it still didn’t work, then you fired the VP of Marketing. If the business was still failing, then you replaced the CEO. Now, you replace the business model first. Pretty cool. He hammered the waterfall product development model: Waterfall has 2 specific errors… it assumes I know the customer problem and I know the features.  Most startups fail from a lack of customers and not product development.

He talked of the big difference between startups and companies. A startup wants to become a company. The definition of a startup is a temporary organization designed to search for a repeatable and scalable business model. That whole startup mode is the “search” for a model. Then, after the model is found, the company exists and is now in “execution”. Then, marketing and sales and development can execute. Executing before the search is complete leads to disaster.  Search! Don’t sell. Don’t code. Get out of the building and question your customers.

He talked of the Lean Canvas and Customer Development. The lean canvas is filled with hypotheses or “f-ing guesses”. The word hypotheses is used because people in school are paying big bucks for tuition, but they are really “f-ing guesses”. I love that.  Customer Development turns the “f-ing guesses” on the canvas into facts.

Startups go from failure to failure. The initial idea is almost always wrong. This is really hard for smart people. How quickly can you learn what is wrong is the key. You can’t get it all right on day 1. If you think that’s true, the odds are you are hallucinating. It’s about how quickly are you learning that you are wrong.
When asked about protecting ideas in the early stage, Steve said if you are doing a web startup…it’s an eng problem. Your idea is not a company. You need rapid customer feedback. You need to talk to customers about their problems and really nail that. Then, you need to see what solutions will work for those problems. Don’t sit in some room and fret over someone taking your idea. Get out and talk to customers. However, if it’s BIO tech, get a patent immediately. Don’t mess around with billion dollar biotech ideas.
We talked about smaller niche markets vs. bigger mass markets. He stated the Business Model Canvas doesn’t show the biz oppty. He said it’s really the difference between doing a small business and a big startup that VC’s want to invest in. If you have a 5m a year business, then it is a small business (which is fine if you want that). If you don’t know the biz model of Angels and VC’s, you will be frustrated. If your biz isn’t large enough, you aren’t getting VC money.   
When asked about straddling markets and deciding which to invest in, he said if you are GM with a lot of resources then you can straddle. But as a startup, you need to really know your market.  You need to understand your market to know when and where to put all your chips in. That’s a startup.  When you push a chip in at a time, you are a small business.  

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Alchemist Customer Development Series

My wife told me about a course on Customer Development and Metrics from the Alchemist Series with the Citrix Accelerator that starts on March 13th. I realized Steve Blank will be teaching, so I signed up in a heart beat! It’s a very special course because it is a small group of students learning from top-notch Silicon Valley entrepreneurs and VC’s. This particular course is being prepared as a lecture series for the top 30 universities, so we get to ask lots of questions from the best and be a part of some stellar new curriculum. It’s not full.  If you want in, visit the link above and get your butt there.

Last night’s session was with Alan Chiu, principle with X/Seed Capital Management. It was a super interesting session. For the business I am working on inside of Intuit, I got solid advice for scrappy/crafty ways of finding customers to interview, knowing when to experiment for design vs. price, knowing when to build, etc. More posts coming on those later. One of my big takeaways was that my previous main two questions are now three.

  1. What question are you trying to answer?
  2. What’s the fastest way to answer it?
  3. What’s the cheapest way to get it answered?
I’ll use these questions the rest of my working life.

Testing a low-fidelity prototype hurts, but it’s good!

For the mobile app I am working on with my buddy Nirav, I recently tried out usertesting.com to get feedback on the app design. This company takes an URL/app, sends it to a panel of their users, and then provides a video of the tester’s use of the URL/app along with written summary from the user.
I have built a working jquery mobile prototype with Nirav that is very rough. Even though it was embarrassing to test something that is so low-fidelity, we thought the feedback would be valuable and decided to see how the process worked with usertesting.com.
The first learning was an “ops” learning to use a super easy URL for the testers.  Right now, we have a long and convoluted URL from Amazon’s ec2 service with characters that require keyboard toggling for mobile phone users. The first three testers had a heck of a time entering in that terrible URL on an iPhone keyboard.  I couldn’t believe that the usertesting folks didn’t get the urls to the user’s mobile devices for them.  When I saw that in the videos, I realized a URL shortener would be a simple mediator. The next test I ran was with a short URL from goo.gl. Users had no problem with that. Why wouldn’t usertesting.com just text or email their user the URL? Anyway…
The next learning, which I have heard from Lean Startup folks before, was that low-fidelity prototypes yield great feedback. I’ve done many usabilities in my 15+ years of working in Silicon Valley, but this prototype is rough with a capital “R”. While there were big problems like decimals to 4 places and only a back button to navigate the app (users got so lost even though there are only 4 screens!), I learned a crucial problem that we need to resolve so a user can grok the real benefit of the app. That was a huge learning that would have taken days longer to get if we had tried to make the prototype better.  It was seriously embarrassing to watch the videos.  It was hard, and I had to stop them and walk away seeing those glaring bugs.
I should call out that there were a number of emotional barriers I had around running a test like this. I thought it wasn’t good enough, and if it wasn’t good enough, then users would hate us. We’d be blacklisted in some way. I thought somehow we’d be tarnished by testing something so unpolished. None of that happened. Now, it seems so odd to have held up experiments like this in the past. The consequences were non-existent. The benefits are moving us forward.